CPI Surprise and the Fed's January Move

Been thinking a lot about next month's CPI print and what it means for the Fed's January meeting. The recent $US30 move, currently sitting around 54349, feels like it's pricing in a pretty soft landing, and maybe even a quick pivot. But my gut says we might get a bit of a curveball.

I'm giving about a 60% chance that the December CPI, due out in January, comes in hotter than market consensus. Not crazy hot, but enough to make the doves on the Fed pause. We've seen some resilience in certain sectors, and while headline numbers have cooled, core services inflation remains a sticky point. If it does, say, tick up by 0.3% MoM for core, rather than the expected 0.2%, I think the odds of a rate cut at the January meeting drop significantly – almost to zero. It then sets up March as the earliest realistic possibility, and even that becomes tenuous. This could put some pressure on risk assets that have rallied hard into year-end, like $UGAZ which is holding around 10.82 today. Just my two cents, not financial advice.